Dragon Rising
The third world war began almost a year ago, but it has hardly been identified as such. Indeed, the Western press is at pains to present the conflict between Kiev and Moscow as a duel between a liberal David and an authoritarian Goliath, an analogy intended to focus public sympathy on the weaker actor in this belligerent tragicomedy. More perspicacious views, such as that of late Professor Mearsheimer, go a step further and recognise the purely imperial character of the Ukrainian conflict, giving the US a central role.
While this type of analysis is somewhat more realistic, it still assumes that the US moves its cards in Eastern Europe with the primary objective of territorially containing Putin’s Russia. Interestingly, Putin has been anything but a Russian imperialist up to this point. Putin himself delayed for years a concrete military response to the systematic violation of the Minsk Accords by all the signatory powers, and when he attacked Ukraine he did so by deploying a tiny fraction of the Russian army, hoping that such an emergency measure would precipitate an early diplomatic solution.
Of course, none of this happened, and the Atlantic élites repaid Russia’s righteous boldness with a tsunami of trade sanctions, whose purpose of economically sinking Russia ironically ended up strengthening its tendency towards autarky and, not least, further tightening its collaboration with China and Iran. In any case, this is no mere skirmish over border rivalries, but the opening salvo in the great war to maintain petrodollar hegemony.
As is well known, though little divulged, the US emerged from the Second World War as the net creditor and largest exporter of manufacturing and agricultural goods in global trade, which endowed its own currency with unsurpassed prestige: this factual situation was diplomatically anointed by the Bretton Woods Agreements, which resulted in the coordination of the central banks of the West and its periphery on the basis of legal parity between the dollar and gold. The new monetary standard was the premise of galloping post-war growth, a parenthesis during which wages and capitalist profits could grow in parallel and not against each other. Unfortunately, the paradigm was exhausted by its own success in bolstering the rentier and monopoly tendencies of capital at its apex of banking and financial accumulation. Also Vietnam.
Thus, by the early 1970s, the US had become a deficit economy, chronically in debt to its own vassal states. The way out of this predicament was purely empirical, and consisted of unilaterally breaking the official dollar-gold convertibility. This was the infamous Nixon Shock of August 1971. From then on, international creditors from France to Japan could only claim their payments in dollars or… in American Treasury bonds — the latter a tautological variation of the same paper currency, to which only an interest reward is added. The age of Bretton Woods ended as a new one loomed large: the age of neoliberalism. The moment was characterised by the traumatic shift from ‘fixed exchange rates’ to floating ones — and hence the hyping speculative wave typical of the ‘post-modern condition’.
Now, being nothing more than a public banknote, fiat money cannot sustain itself forever in the autistic fantasy of its own ‘sovereign bond’ (just as Baron Münchhausen should not be able to pull himself out of the swamp by his own pigtail). In practice, all state money bases its prestige on the things it can purchase. Consequently, oil seemed in those days a sufficiently charismatic candidate to replace the yellow metal.
Of course, oil-producing countries had always preferred to be paid in hard currency, but so far no exclusivity had been established. It was to the credit of Kissinger, the grey eminence in Nixon’s cabinet, that he managed to coordinate oil supply with the Western market, whilst capturing Chinese disciplined workforce as scabs against American and European unions. Such an arrangement, which might be called the Great Triangulation, meant that the US gave up its industrial and redistributive project, concentrating instead on financial and military services.
Although it has weathered two sabotages by Arab countries, the memorable energy crises of 1973 and 1979, the petrodollar remains the universal monetary standard. Paradoxically, its survival is only threatened by the rise of the disruptive Chinese partner, whose extraordinary growth, for which the US itself is partly responsible, has been accompanied by the acquisition of massive gold reserves. Needless to say, the petroyuan is now being touted as an ambitious heir apparent to global seigniorage, and therefore capable enough to dethrone the greenback. Against this backdrop, China has had no choice but to seek new allies within the Eurasian space, the first of which was Russia.
This seems like a matter of common sense, given that China is the largest importer of crude oil, and as such is in a position to set the prices of purchases in its own national currency. Moreover, Beijing’s currency move, quite clear since 2017, has been echoed by the Kremlin recently, albeit from the reverse perspective, Russia being the main exporter of natural gas with 200 billion cubic metres per year.
In sum, Chineses plans to displace the dollar boil down to employing gold-backed yuan-denominated futures contracts, Shanghai serving as a legal platform. But the alternative is anything but easy, and carries serious risks for China. The Middle Kingdom is the second largest holder of US Treasury bonds, so it is in the dilemma of liquefying its dollar savings as it converts the yuan into an international currency by pegging it to oil and gold.
Heartland’s Eye
At first sight, Ukraine is a mediocre trophy of conquest. True, until the eve of the war, the country had a GDP per capita barely higher than Guatemala’s. Comparatively, the three post-Soviet decades have been perhaps worse for Ukraine than for its other sister republics, with autocratic Belarus a clear example of adaptation and resilience. Belarus’s average income is a third higher than Ukraine’s, since its public infrastructure has avoided the onslaught of IMF’s neoliberal extortions. To be sure, there are more auspicious exhibits of neoliberal transition in Eastern Europe, but the Kiev régime, with its bumpy trajectory from hyperinflation to recession, is not one of them. Eventually, ill-fated Ukraine has devolved into an agro-export economy with advanced business niches in womb renting startups and child pornography farms.
Caricatures aside, however, Ukraine remains a pivotal geopolitical crossroads given its centrality in the wider context of the World-Island. The current Ukrainian Republic — which owes its existence more to Lenin and Khrushchev than to Petliura and Bandera — obstructs Moscow’s expeditious exit to the warm seas, its fleet being blocked by ice during the harsh Baltic winters. Accordingly, the southern Crimea has been an outpost of Russian naval effort since Tsardom itself. Later, during Stalinism, Ukraine was the object of steel, hydroelectric and nuclear development, once grain production had stabilised after the famines of the 1920s and 1930s. All of which is not to say that Ukraine was a socialist Arcadia until the Fall of Berlin’s Wall. Nevertheless, material progress in this region during the Soviet era is difficult to dispute today in the light of accumulated statistics. In reality, Ukraine had a privileged status in the Nomenklatura’s view, and so it was pampered because of being a ganglion of long-term Russian maritime strategy.
Since its independence referendum in 1992, followed by an unmitigated opening of trade, Ukraine has contributed to the international market with items such as grain, fertilisers and neon. The first two are crucial to food supplies, while the noble gas — which also keeps advertising signs flashing in the shop windows of Cosmopolis — is a critical resource in the lasers producing semiconductors. As for the ‘cereal complex’, Ukraine lays at the heart of one of the two most fertile regions of the planet.
In fact, apart from Russia itself, Ukraine is the European country with the largest surface area, much of which is composed of soils rich in nutrients, namely ‘black earths’ (or chernozem in Russian). Along with North American Prairies’, Pontic Steppe’s Black Earth Belt promises to be the breadbasket of the future. Anecdotally, it is worth mentioning here the rush of COVID-era billionaires, Bill Gates the first of them, to grab arable land wherever they can. Case in point, researcher Mykhailo Amosov reports that land privatization in Ukraine, despite an ongoing moratorium, has led to extreme property concentration and agiotage. No wonder, such is the current degree of commercial voracity that even the topsoil is shovelled out and sold in clandestine outlets. As of today, and regardless of its agricultural resources, or precisely because of these, Ukraine remains the poorest country in Europe, severely damaged by its rupture with the previous Soviet oecumene.
Incidentally, one of the institutional survivals of the Communist past is the Russian entangled gas network in which Kiev boasts a crucial role, and from which it still benefits parasitically. In practice, Zelensky’s position is that of a controller of Gazprom’s pipeline tolls that never belonged to it, holding a lever of sabotage for the rest of the European, and especially German, civilian economy. Speaking of which, it is worth recalling the nepotistic prominence of Biden’s son in the Ukrainian corruption and money laundering ecosystem. Indeed, Hunter Biden vicariously sat on the board of the Burisma gas company while he hopped from orgy to orgy in the style of some Nabokovian antihero. Yet, gossip aside, Kiev’s gas extortion against Europe remains one of the main footholds of Washington imperialism on this side of the Atlantic.
Now return to basics. US fossil energy needed a ‘captive market’ when shale oil and gas reached their threshold of diminishing returns a couple of years ago. In other words, the American fracking business has already exhausted the most accessible deposits, and now needs more and more extractive energy for less and less output. Without public subsidies and forced customers abroad, American fuel supply is no match for cheap Russian gas, which until virtually yesterday fed much of the German manufacturing citadel. Events such as the blowing up of Nord Stream II, whose pharaonic pipeline heralded the auspicious prospects of Russian-German symbiosis, now relegate Berlin as a sequestered buyer for the Anglo-Saxon oil companies’ racket.
Archaeologists of the future — should the Ukrainian skirmish end in nuclear apocalypse — will no doubt appreciate that for Washington’s elites the tactical enemy is Russia, the strategic one China, and the necessary victims Germany and its immediate orbit.
Neocon Hybris
Zionist influence throughout 20th century US foreign policy has always been important, but only dominant during the last three or four decades. Naturally, it is a tainted subject, and anyone who addresses it may end up incurring anathema. For example, historian Joseph Bendersky, in his book The Jewish Threat, highlights the paranoid punctiliousness of army intelligence services when confronted with alleged Zionist or ‘Judeo-Bolshevik’ subversion. Yet Bendersky’s text makes no mention of the blackmail of the adulterous Woodrow Wilson in order to involve the United States in World War I, a plan hatched by a Zionist clique infiltrating the White House. Thus, what began as a sex scandal by the pacifist and isolationist Wilson culminated in the US entering the First World War at exactly the moment when Britain was in a stalemate with Germany. Not before long, Downing Street returned the Lobby’s favour by issuing the Balfour Declaration, an imperial alibi for the Zionist colonisation of Ottoman Palestine.
A generation or so later, former Trotskyites displaced by the Kremlin’s anti-cosmopolitan turn, many of them Jewish writers and activists, joined the New York intelligentsia to create a modern anti-authoritarian Left, whose aim was to polemicise against Stalinist cultural policy and to neutralise and co-opt European socialists in favour of the Marshall Plan and NATO. Eventually, from these Cold War Liberals, along with younger Leo Strauss’ neophytes, would emerge the most militant core of the Neocon movement, an elite responsible for shaping Washington’s unipolar strategy since the Soviet implosion. In a sense, hitherto, much of the chaotic reshaping of Eastern Europe and the Levant owes more to neoconservative hawkish diplomacy than to the legacy of the Treaties of Versailles and the Sykes-Picot Agreement. Thus far, the great experiments have been Yugoslavia, Iraq and Libya, the former to establish a bridgehead against Russia and the latter targeting Iran.
Certainly, none of these cases has been particularly successful in conventional military terms, but postmodern America is not an empire in the conventional sense. Washington does not want to win wars, but to prolong them indefinitely to increase market volatility and maintain the dollar’s prestige as a store of value, above all to boost the international sales of its arms companies, the very core of its industrial complex. Rome used to win wars for glory and tribute; the US loses wars on purpose to sell arms by mimetic rivalry between its satellites and to reinforce dollar’s seigniorage. Even the oil business, though crucial, takes a back seat to military-financial adventurism. In retrospect, the United States is perhaps the first ‘entropic empire’, insofar as it tends towards money extortion rather than direct management of grabbed resources — an option that used to involve building minimal extractive infrastructure on occupied territories.
‘The war in Ukraine is the culmination of a 30-year project of the US neoconservative movement,’ argues economist Jeffrey Sachs, anything but an incendiary dissident in the West. Quite the opposite. Sachs himself was an insider during Yeltsin’s privatisation jihad, so he may have direct biographical knowledge of the rise of neoconservative policy towards the post-Soviet republics and the link between them and the new mafia of Eastern European oligarchs, the main beneficiaries of the neoliberal sellout. Parenthetically, this cohabitation between Washington’s imperial hawks and the nouveau riche underworld is the very background to Zelensky’s puppetry, which has diplomat Victoria Nuland and gangster Ihor Kolomoisky as opaque drivers and protectors.
Yet, oddly enough, the dissimulation of the whole affair is rather scarse. At least since the terror hype of 9-11, the mandarins of neoconservatism have been quite explicit in their unipolarist propaganda. True, the fabled emperor does not even bother to pretend to wear a disguise. One need only glance at the pamphlets of Frum and Perle (An End to Evil, 2003), or Robert Kagan (Power & Paradise, of the same year) to be immersed in a rhetoric of smug brutality and triumphalism. Suffice it to recall here Nuland’s audio leak at the time of the Maidan coup when asked about the repercussions of the pro-Western Colour Revolution in Kiev: ‘Fuck Europe!’ Such an expression of chutzpah needs no comment or retort.
The World is not Enough
Neo-conservatism is the most self-conscious movement of the diasporic Jewish bourgeoisie and its functional allies throughout the Western élites, especially the rentier and managerial classes. Historically, the neocons crystallised as a pressure group and public opinion-maker during the struggle for the legal exit of Soviet Jews to Israel, and have since shown a hateful bias —even a certain flair of family vendetta— against the Kremlin’s sphere of power, even if Moscow until recently professed a policy of self-restraint and humble accommodation with the West. The task of balkanisation and atomisation of Russia thus transcends any superstitious doctrinaire left-right divide, and is rather a realistic new Ostpolitik to prevent the union of China, Russia and Iran, to the extent that they can create a prosperous economic pole that allows for a seigniorage rival to the dollar.
Keen observers such as John Mearhseimer, Stephen Cohen, James Petras, Emmanuel Todd and Kees van der Pijl have hinted, sometimes bluntly, sometimes cryptically, at this emerging scenario. However, stating the obvious is a perilous endeavour nowadays.